3 min read
Critical Numbers in Manufacturing
By: Kristin McLane on June 17, 2020 at 10:30 AM
No matter what you make, there are critical numbers you have to know if you’re going to be in manufacturing. Run rate, profitability and order control are a few things to start with. If you’re really able to get your hands on data, look to margin by job and actual time. These numbers tell you how you’re doing, dictate profitability and also give you a natural comparison to your industry.
We're going to break each of these down over the coming weeks and talk about the environment it takes to really have both the data and the process to support each. Starting with run rate seems easy but it’s more complex than you think.
Run rate in manufacturing is not a simple number. In reality, it may be one of the most complex you have to consider. First, let’s cover what run rate is not. Run rate is not a calculation of the number of people you have on the shop floor times 8 hours. It is not the number of machines you have times the same. It is not the number of orders you have for work right now.
Run rate is a synthesis of all the work, people, machines and time you have. From one week to the next, one month or quarter to the next, it’s a strong measure of health for any business. Know your run rate and you know a lot about your manufacturing shop floor. You know what you can produce and how you’re performing against that metric.
Each person you have can, and maybe will (notice that maybe) produce 8, 9 or 10 hours of work each day, depending on your shift schedule. That maybe wasn’t thrown in there for effect. There are only 2 types of shops that generally have every one of their workers booked for the entire shift:
- those that are so far behind that everyone is guaranteed to be busy all the time and
- those that are well-oiled and know how to maximize their production rates.
Your people have specialties, certifications and even work they’ve done that makes them more important to you in some areas of the shop than others. These are resources that are not easily trained in manufacturing. You’re going to want them to have the background to know what they’re doing and the proper instructions to make sure they do it correctly. Their throughput might be limited by new work, slowdowns in other areas and material shortages.
They won’t work as fast if you don’t have everything they need to do the work to them prior to them starting the job. They want and need help right away when something goes wrong (that is a tall task the larger and more open your space is) and may not pick work in the order that you want them to, leaving the next operator stranded until they do.
For people to increase your run rate, you need to be prepared, have all the right information ready at all times and provide them with a little extra slack in the queue so, if they move faster or slower than expected, you can override drastic changes to your throughput.
Systems are the answer. Human potential cannot be maximized with a series of spreadsheets or magnetized boards. If you want happy people, producing at the rate that they can, you need a system.
Next week, we touch on how work affects run rate. Again, it may seem obvious, but did you have your magnet boards in mind when we first asked about people? Tune in.
In 2020, we are rolling out meaningful tools for manufacturers that are affordable, on-target and competitive. We are also expanding our educational offerings.
We believe in the critical importance of manufacturing right here in North America and we work hard to keep you working. Ask us questions; you will find that we are far more reachable than other software providers you may partner with. We are here to help you find the right tools and use them, whether it's a Google doc, an Excel sheet or a Production Control system. To learn more about meeting your targets for 2020 or just getting a question answered, visit us at www.cimx.com.